AT LEAST one shipping analyst has called the bottom of the tanker market, citing rising steel prices alongside China’s rapid industrial rebound, falling global crude inventories and increased demand for transport fuels as travel rises in the US following a successful vaccine rollout.

The sentiments were echoed by Oslo-listed product tanker owner Hafnia, which reported loss-making first-quarter results but said signs of a recovery, including declining land-based inventories, were “pointing in the right direction”.

Strong economic growth in the US and China led to rising oil consumption that would boost demand for tankers, while trade projections suggested that global seaborne product demand would rebound in the second half, said chief executive Michael Skov.

Demand for most refined products was expected to reach pre-pandemic levels by the end of 2021, except for jet fuel, Hafnia indicated in an investor conference call.

The company posted a $15.6m loss on revenue of $179.3m for the quarter ending March 31 compared with a profit of $77.1m on earnings of $268.4m for the year-ago period.

New York investment bank Evercore ISI’s latest report upgraded the tanker segment of eight companies covered on May 24 and said it was time to call the market bottom and “go long”. Evercore does not cover Hafnia.

The existing risks affecting the timing and magnitude of the tanker recovery “are increasingly being overwhelmed by incremental upside”, the Evercore report said.

The rising tide of steel prices and a buoyant second-hand market are lifting all tanker asset prices, the Evercore report authored by Jonathan Chappell noted. Although the bank has yet to revise its spot rate estimates, its target prices for stocks of companies it covers are 45% higher than before.

Hafnia, which has a fleet of 98 product tankers, from handysize to the largest long range two vessels, cited easing travel restrictions for the better demand figures for gasoline and diesel. These two transport fuels account some 45% of oil demand.

The production of masks, medical kit, disposable syringes and other related equipment was also keeping demand strong for polypropylene, the company said. Polypropylene is produced by cracking naphtha, with shipments of this petrochemical dominating employment of long range tankers to Asia from the Middle East.

Hafnia and Evercore have cited the drawdown of the land-based surplus of crude and products as positive for tanker markets. Hafnia said crude inventories — which built when the global pandemic paralysed demand — shrank by 1.1m barrels per day over the last 12 months.

Evercore said the overhang had largely been removed.

The tanker orderbook represented 7% of the existing fleet, said Mr Skov, with fleet growth projected at 2%.

An increase in building new containerships in Asia shipyards, triggered by record-breaking profits of the past nine months, was widening the time between order and delivery of tankers to 2023 and beyond, he said.

“We believe the risk of missing a large cyclical upturn in the (tanker) stocks is now greater than being a bit early,” Evercore said in its report.